Controlling international relocation costs

10 Apr 2015

3/CONTROLLING INTERNATIONAL RELOCATION COSTS (corporate relocation costs/international relocation expenses)

Companies planning to provide international relocation assistance for their employees can expect to have the usual concerns from transferees:  selecting a mover, help with selling an existing home, support in the new location, and so on. In addition, there are also visas, international taxes, housing allowances, and replicating previous living standards as closely as possible. Other typical services include:

  • Assistance with the management of relocation expenses
  • Household goods moving
  • Destination and arrival support services
  • Spousal support and counseling
  • Cross-cultural training and language classes
  • Locating quality schools for children who may be accompanying the transferee
  • Ongoing support while becoming oriented to day-to-day life in the new location
  • Security for employees and their families
  • Personal transportation car purchasing, leases or company drivers

While all these services are important, they help increase the costs and complexity of international relocations. Utilizing the services of a relocation management firm is an effective means of controlling relocation costs. Third-party relocation management firms work with a network of trusted suppliers and know how to make the most cost-effective use of resources.

Whether you manage your relocation program in-house or utilize the services of a relocation management company, following are several strategies that have proven helpful in controlling international relocation expenses:

  1. Establish a fair ceiling for housing and related costs for transferees, taking into account the area’s monetary and real estate market fluctuations.
  2. Consider the length of the relocation. The longer the transferee will stay, the more the compensation rates should be in line with those of the host country. Keep in mind, however, that such containments should not fall significantly below what was previously earned; no employee wants to lose money as a result of a transfer.
  3. Offer the transferee financial incentives to reduce the amount of larger household goods to be moved. In addition to the extra expense, transporting some appliances, such as washers or other appliances may be counter-productive as power and other operating requirements in the new location may be incompatible with the appliances. This will spread some of the responsibility for expenses with the employee.
  4. Get quotes from several relocation companies to determine what services are available, as well as check any available customer ratings. As with movers, not all relocation firms are created equal.
  5. Carefully estimate the amount of cash and other out-of-pocket expenses and resources needed for a transfer. Underestimating is one of the most common mistakes made – be sure to have a full list of actual and anticipated expenses drawn up in advance.

While there is much within your control, other factors affecting costs – the value of overseas real estate, for example, as well as international monetary fluctuations – are not. Be prepared and allow for at least a few surprises when planning your transfer budget for optimum assistance in getting your transferred employee off to a good start in his or her new location.relo-500x320 Budgeting